Problematic perspectives on EPA’s latest greenhouse gas standards

The writing on passenger-side mirrors of vehicles is so well known that it’s easily overlooked, but it delivers an important truth about perceptions and reality. What you see in that mirror is closer than it appears, so don’t let your skewed perspective result in a poor decision that wrecks your reality.

When it comes to protecting the environment, there’s a very real need for progress. But edicts from the federal government too often create a perception of progress that doesn’t mirror the realities they create. In other words, the promised progress of environmental regulations is often much more distant than it appears.

The third phase of the Environmental Protection Agency’s greenhouse gas standards for heavy-duty vehicles, for instance, promises to significantly reduce CO₂ emissions by trucks. The benefit? A reduction of nearly “1 billion metric tons of greenhouse gas emissions” from 2027 to 2055, according to the EPA, and “$13 billion in annualized net benefits through 2055.”

But can the perceived progress measure up to the actual improvements the higher standards will create?

The very short answer is no.

Instead, EPA standards finalized March 29 are problematic environmental policy for at least four reasons, especially as it relates to supply chains.

1. The rule targets one component of supply chains.

The new standards apply to heavy-duty vehicles (e.g., delivery trucks, garbage haulers, public-utility trucks, and buses) and the day-cab and sleeper-cab tractors of 18-wheelers. The higher standards begin in 2027 for certain categories of trucks coming off assembly lines.

Transportation, as the EPA points out, accounts for 29% of greenhouse gas emissions in the U.S., and heavy-duty trucks are the second-largest contributor (25%) within transportation.

That sounds like a lot, but another way to state it is that heavy-duty trucks account for 7% of the nation’s greenhouse gas emissions (29% * 25% = 7.25%). So, the new standards don’t address the sources responsible for 93% of emissions.

2. The approach lacks the comprehensive, global action needed for effective change.

In a global economy designed around fossil fuels, environmental regulators need to take a comprehensive approach to altering fundamental transportation policies.

Furthermore, carbon mixes globally and stays in the atmosphere. Even if the new rules reduce carbon emissions from trucks, it does nothing to get CO₂ out of the atmosphere. Other policies need to focus on removing carbon that’s already in the air, and all policies need to work together to achieve maximum impact.

3. Plugging one leak often causes others to sprout.

Narrow rules can create both unintended consequences and others that were predictable. In this case, it’s practically certain that forcing higher standards on new-model, heavy-duty trucks will lead to higher emissions elsewhere in the supply chain.

The easiest way to reduce emissions is to get the mode right—moving more freight aboard boats and trains, for instance, and less on trucks and planes. Adopting policies that reduce railway costs, while increasing capacity and competition, could substantially lessen freight emissions. EPA rules that make trucks a more expensive option are likely to encourage substitution toward rail; however, planes would likely become more economically attractive to those needing to move their products quickly, which would tend offset any environmental gains.

Most freight eventually ends up on a truck for some portion of its journey, of course. Larger carriers that invest in the newer fleets often charge a premium to help cover their new equipment costs, while smaller owner-operators, usually more resource-constrained, continue to use older, less environmentally friendly fleets. Businesses, therefore, might lean toward the owner-operators if they offer reduced pricing.

The regulations, meanwhile, govern how these trucks are made but not how they are operated. Older trucks that don’t meet the new standards actually might emit less greenhouse gases than a new model, for instance, if they are equipped with aerodynamic kits and trailers, and if their drivers are more efficient in managing their speeds and loads.

4. Complexity comes with a cost.

The EPA summarized the Phase 3 standards with a three-page document, but the devil is in the details of a rule that, in full form, requires more than 1,000 pages of explanation and impact analysis. From a cynical viewpoint, that’s great for an academic like me because it offers plenty to research and write about. But it’s not much fun for those who are responsible for applying and adhering to the regulations.

While these types of regulations reduce emissions, they don’t on a scale necessary to have a real impact. They do not incentivize revolutionary technology shifts (such as hydrogen fuel cells or electric vehicles) or the fundamental reorganizations of supply chains necessary to achieve a zero-carbon world. They promote minimal and uninspired bureaucratic compliance when what is needed is free-wheeling and disruptive innovation.

There’s some merit to the argument that the latest EPA regulations are a step in the right direction, even if they come with a few flaws. A well-worn adage says don’t let the perfect be the enemy of the good. So, we can hope the new standards deliver on their promise of reducing carbon emissions and saving the economy money. But there’s another applicable old saying: Hope is not a strategy, especially when better policy tools (carbon pricing: https://www.rff.org/topics/carbon-pricing/) are available. The government would do well by the environment to invest more energy and money in those options and formulate a more comprehensive, global approach to reducing CO₂ in the atmosphere.

About the author

Andrew Balthrop (PhD) is a research associate within the Supply Chain Management Research Center at the Sam M. Walton College of Business at the University of Arkansas. His research focuses on the interaction between supply chains and public policy. He can be reached at [email protected].

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